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Canada Post should deliver on postal banking

Canada Post’s own studies concluded that the beleaguered Crown corporation 'could profitably launch the largest banking network in the country.'

Canada Post trucks at the Gateway sorting facility in Mississauga. (Frank Gunn / THE CANADIAN PRESS)

By Ethan Cox

Wed., Feb. 19, 2014

When it comes to Canada Post would you rather pay more for fewer services, or pay less for more services?

Sound like a stupid question? Well, just wait until you hear how our federal government answered it.

In an exclusive report, parliamentary news site Blacklock’s Reporter disclosed last week that Canada Post spent the better part of four years conducting research, polling and focus group studies, all of which concluded that the Crown corporation “could profitably launch the largest banking network in the country.”

One management report, entitled Banking: A Proven Diversification Strategy, concluded that offering public banking services through post offices would be a “win-win strategy.”

Of 811 pages of material released under access to information legislation, 701 were redacted so there’s still much that is being kept from us. But what we do know is damning.

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Despite four years of intensive research and study which saw Canada Post conclude that postal banking was a “proven money-maker,” the government chose to hike fees and eliminate door-to-door delivery instead.

No doubt Canadians hold a wide variety of views on the post office and its future, as they do on most subjects. However, these disclosures suggest that our government withheld information from the public and chose to cut services and increase costs for Canadians despite clear evidence that there were better options on the table.

Which raises the question: if our government is not acting in our best interests, as citizens and clients of Canada Post, whose interests are they upholding?

Postal banking sounds almost fantastical in a Canadian context. However, a 2013 report by the Canadian Centre for Policy Alternatives (CCPA) showed that it was the norm in most developed countries outside North America, and provides anywhere from 13 per cent to 78 per cent of post office profits in the dozens of countries which operate a postal bank, such as England, France, Italy, Switzerland and Japan.

Canada Post’s own research was only able to identify one example of a postal bank failing to turn a profit: Irish AnPost, which followed that nation’s entire economy down the drain in 2010.

Canada itself once had a postal bank, which was eliminated under pressure from the banking lobby in 1968. The basic idea, as laid out in a CCPA report titled Why Canada Needs Postal Banking, is quite simple.

By offering banking services through its existing network of 6,519 postal outlets Canada Post would overnight become the most accessible bank in the country. In addition to generating revenue which could cross-subsidize postal services well into the future, with profits estimated at an average of 20.5 per cent annually, a public postal bank would provide competition to the big banks and drive down rates for consumers. (Love paying five bucks to withdraw a twenty of your own money? Me neither.)

In addition to its effect on postal services, bank fees and accessibility for all Canadians, a postal bank would have a particularly positive impact on the working poor, the unbanked and Indigenous communities.

Money Mart, the largest Canadian payday lender, had revenues of more than $1 billion in 2012. Little wonder, considering that the average nominal interest such payday lenders charge in Canada is 839.5 per cent (APR). It is estimated that up to 15 per cent of Canadians do not have a bank account, and these “unbanked” are easy prey for the usurious practices of payday lenders, who are often their only option to cash cheques.

A public postal bank would offer cheque-cashing services to all Canadians and allow the unbanked easy access to their money without recourse to these type of institutions.

Finally, while the Indigenous population is growing rapidly, approaching 5 per cent of the Canadian population in 2014, there are only 54 bank or credit union branches spread amongst 615 Aboriginal communities. Most of those communities do, however, have access to a post office.

In summary, a public postal bank would increase access and reduce bank fees for all Canadians, ensure the long-term sustainability of Canada Post and door-to-door delivery and radically improve service to the unbanked and Indigenous communities.

If you own a lot of stock in the big banks then I can see why you would oppose postal banking. But for the rest of us, it’s a no-brainer.

Despite the fact Canada Post has been profitable in 17 of the past 18 years, earned more than $1.5 billion in profits in the past decade alone, and has a pension plan which is fully-funded on a going-concern basis, our government claimed they had no choice but to gut it.

I suppose the lesson here is that the big banks have better lobbyists than do citizens. Or perhaps it was an ideological urge to slash public services that drove this decision, facts be damned.

In either case, one thing is certain. Our government has not been acting in our best interests. And that should be a concern for all Canadians.

Ethan Cox is a Montreal-based journalist and Senior Partner with CauseComms: Communications for the Common Good.

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